Lotte Chemical Titan Q3 net profit down on margin squeeze

PETALING JAYA: Lotte Chemical Titan Holding Bhd’s earnings declined 5.8% to RM216.9 million in the third quarter ended Sept 30, 2018, from RM230.3 million in the previous corresponding quarter.

The petrochemical firm said in the stock exchange filing that the lower net profit was mainly attributed to margin squeeze resulting from a significant increase in feedstock prices.

However, it said the decrease in profit was partially mitigated by improvement in other operating income which includes higher foreign exchange gain, gain on fair value changes in derivatives and lower property, plant and equipment written off.

Revenue for the quarter up 20% to RM2.42 billion compared with RM2.02 billion in the same period in 2017, due to the increase in sales volume, which was driven by improvement in production quantity and increase in average product selling prices.

Its average plant utilisation rate improved from 77% to 87% in Q3 2018.

For the nine months period, Lotte’s net profit increased 13% to RM776.1 million, against RM686.1 million a year ago, while revenue jumped 21% to RM6.9 billion, from RM5.7 billion previously.

On its prospects, the group expects oil prices to increase with the Iran sanction and strong gasoline demand.

However, it said the escalation of trade war between the US and China will weaken the global demand and consequently dampen the growth in oil prices. This uncertainty will result in the volatile fluctuation of crude oil and naphtha prices.

“We expect market sentiment to remain cautious with the unresolved US-China trade war and uncertainty in crude oil prices,” it added.